Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Block, Inc. (NYSE:SQ) based on that data and determine whether they were really smart about the stock.
Is Block, Inc. (NYSE:SQ) a buy right now? Investors who are in the know were turning bullish. The number of bullish hedge fund bets inched up by 4 in recent months. Block, Inc. (NYSE:SQ) was in 98 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 94. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SQ ranked 18th among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to go over the key hedge fund action surrounding Block, Inc. (NYSE:SQ).
Cathie Wood of ARK Investment Management
Do Hedge Funds Think SQ Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 98 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the previous quarter. On the other hand, there were a total of 73 hedge funds with a bullish position in SQ a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, ARK Investment Management was the largest shareholder of Block, Inc. (NYSE:SQ), with a stake worth $1467.9 million reported as of the end of September. Trailing ARK Investment Management was Lone Pine Capital, which amassed a stake valued at $1290.5 million. Bares Capital Management, Citadel Investment Group, and Coatue Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Kuvari Partners allocated the biggest weight to Block, Inc. (NYSE:SQ), around 29.69% of its 13F portfolio. Bares Capital Management is also relatively very bullish on the stock, designating 18.87 percent of its 13F equity portfolio to SQ.
Now, specific money managers have jumped into Block, Inc. (NYSE:SQ) headfirst. Melvin Capital Management, managed by Gabriel Plotkin, established the most outsized position in Block, Inc. (NYSE:SQ). Melvin Capital Management had $311.8 million invested in the company at the end of the quarter. Robert Pohly’s Samlyn Capital also initiated a $136.8 million position during the quarter. The other funds with new positions in the stock are Panayotis Takis Sparaggis’s Alkeon Capital Management, John Armitage’s Egerton Capital Limited, and Aaron Cowen’s Suvretta Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Block, Inc. (NYSE:SQ) but similarly valued. We will take a look at The Estee Lauder Companies Inc (NYSE:EL), Rio Tinto Group (NYSE:RIO), HSBC Holdings plc (NYSE:HSBC), Caterpillar Inc. (NYSE:CAT), Deere & Company (NYSE:DE), S&P Global Inc. (NYSE:SPGI), and 3M Company (NYSE:MMM). This group of stocks’ market values are similar to SQ’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EL | 49 | 4137243 | -1 |
| RIO | 20 | 1330364 | -1 |
| HSBC | 10 | 196426 | -1 |
| CAT | 46 | 4778511 | -16 |
| DE | 54 | 2530736 | 2 |
| SPGI | 78 | 7036868 | 7 |
| MMM | 46 | 1624838 | 4 |
| Average | 43.3 | 3090712 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 43.3 hedge funds with bullish positions and the average amount invested in these stocks was $3091 million. That figure was $8885 million in SQ’s case. S&P Global Inc. (NYSE:SPGI) is the most popular stock in this table. On the other hand HSBC Holdings plc (NYSE:HSBC) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Block, Inc. (NYSE:SQ) is more popular among hedge funds. Our overall hedge fund sentiment score for SQ is 91.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, SQ wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SQ were disappointed as the stock returned -49% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
